Spending Right When Spending Big: Preparing for Big Purchases

You will spend money on several big purchases in life, some of which you cannot really expect, while others can be planned in advance. When you are about to relocate, buy a house, lease a car, or marry your special someone, you can do some preparations for these expenses. You can summarise what you have to do in three steps.

Assess your situation

It is always a good idea to know where you stand – financially, that is. Draft your current budget: how much you have saved, money you expect when and where, and your expenses – such as mortgage, power, and water bills. This should give you a working idea on how much you can spend.

Evaluate the upcoming purchase. See the bigger picture and know how much this deal would cost you, including taxes and other extraneous expenses. You should also have an idea about the monthly payment, the total amount, the annual interest rate, if applicable, and the time frame of the payment.

Note that, ideally, you must never tap into emergency funds to finance major purchases, as these are for eventualities that may arise out of nowhere. With this in mind, make sure that the purchase fits your budget.

Know your channels and limits

Where would you source your funds? Do you have enough money at the ready? You might need to apply for an online personal loan to have sufficient cash for the down payment. Remember that it is all right to file a loan, as long as you understand the terms. You should only borrow money when you need it for something of high importance.

Plan your finances

Chances are you borrowed some cash from a financial institution or maybe even maxed out your credit card. When this happens, you should have a workable plan as to how you would pay the monthly dues. You might have to work overtime, get a second job, and cut back on some of your luxuries. What matters is you should be responsible enough to pay your bills to avoid having a bad credit.

Big purchases are inevitable. You will come to a point where you have to invest in something pricey. When this happens, you should know how to strategise so that you will spend right, even though you are spending big.